Coca Cola HBC (LON:CCH): a high-quality investment?

High-quality companies outperform junk companies in the stock market. From Robert Novy-Marx to Joseph Piotroski, the world’s foremost investment academics have built up a body of work that confirms quality as a stock market factor that outperforms over time.

But what exactly is this quality factor?

Put simply, it represents strong cash-generation, consistent profits, high rates of return on investment, high margins and robust financial health. Quality companies are the kind of thing Warren Buffett might pick up (at the right price, of course).

Stockopedia's Quality Rank attempts to address three key questions concerning a stock:

1. Is the company a stable, growing, cashflow generative business with high returns?
2. In which direction are the company's fundamentals headed
   
3. Is there a risk to your capital in investing in this company?

What Stockopedia’s Quality Rank says about Coca Cola HBC

Stockopedia has built its Quality Rank to quickly show investors how well every stock in the market stacks up according to these criteria. Is Coca Cola HBC (LON:CCH) a high-quality investment?

Coca Cola HBC has a Quality Rank of 75. This puts it in the top quartile of the stock market in terms of quality characteristics. High quality stocks are desirable investments but they often come at a premium - so checking Coca Cola HBC Value Rank might be an appropriate next step.

What does this mean for potential investors?

Some of the best quality stocks in the market have defensible models that can deliver high levels of shareholder returns over the long term. But there are no guarantees and it's important to do your own research. Indeed, we've identified some areas of concern with Coca Cola HBC AG that you can find out about here.